Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
20M shares are traded on the AAPL per day in average - this is what we had in 1982 - 25 years ago. Strong drop in trading volume on this stock caused by 2 factors:
1. We have smaller numbers of shares outstanding as a result of buyback stocks
2. We have bigger number of long-term investors who just hold this stock - mid-term investors turned into long-term.
However the market is favorable. 2017 is a Bull market and AAPL could be one of the best stocks to tide.
Source: https://www.marketvolume.com/charts/
We may see a small correction caused by the coming FED's rate increase, however many investors will consider it as an opportunity to buy at low. Why?
Below you may see the S&P 500 index and historical rates. Current rates are still lower than they were at the bottom of 2000-2003 stock market recession. They have to go up to 3% at least. Only when when we see that FED stops rising rates - only then we may consider the end of the Bull market.
One of an condition for the market dive into a recession is to have high rates when wen investors and corporations run into difficulties with borrowing.
Chart source: https://www.marketvolume.com/quotes/economic_report.asp?release=fomc_rate
Negative divergence In Breadth Numbers (decline in the number of bullish stocks while price moves up) may suggest coming weakness in the current Bullish trend.
Charts from https://www.marketvolume.com
By using the intrinsic value formula on the 30 stocks listed in the DJI index and then calculating the average of Relative Intrinsic Value (RIV):
http://www.marketvolume.com/stocks/overpriced_bg.asp?t=DJI
We may say tat Average RIV = 0.9735 which tells us that DJI index only slightly overpriced - it is below 1 but not strongly to say the the market is Bubbled..
As automakers are trying to get into the EV market, the Tesla still has a time to swallow sweet piece of pie from the car market. The absence of the competitors favors the Tesla, yet, pressure is rising.
For more than 2 years the TSLA is in the $180-270 corridor. It is also is in the down-trend since April 2016 - see the chart below
No matter what we have during the 3Q 2016 earnings report release - it is all for the short-term layers who trade on the TSLA volatility. The Tesla is going to be around for a long time and we are at the beginning of the EV revolution. As EV era unfolds there will be a lot of up-side movement.
chart courtesy of http://www.marketvolume.com/stocks/
Since January of 2014 the Tesla has been struggling to break above the $270 resistance. Four times, the it moved close to this level just to drop later back down to the $180 support level.
Chart source of http://www.marketvolume.com/stocks/
As Apple created iPhone which became revolutionary new product, Tesla created first, fully electric car which is great. Tesla not only made a great product it pushed the technology development into a new territory. Many started to understand that the future ois in electric and self driving cars. However, in opposite to Apple failed to skyrocket.
Tesla in opposite to Apple failed to deliver profit. Elon Musk has a great vision, this vision materialized in the great product, there is great future potential and so far there is zero profit. Tesla constantly reported negative earnings:
http://finance.yahoo.com/quote/TSLA/financials?p=TSLA
Negative earnings, negative cash flow, negative profit margin, growing debt
http://finance.yahoo.com/quote/TSLA/key-statistics?p=TSLA
Investors see the potential, yet, as TSLA stock moves close to $280 resistance the investors start wondering whether the vision turns into profit someday.
Bailing out cousin's company SolarCity, Elon Musk pushed the Tesla even deeper into "burning cash stream".
http://www.bloomberg.com/news/articles/2016-08-01/elon-musk-s-solarcity-offer-wipes-out-his-cousins-stock-options
Elon Musk has a lot of visions up to the Mars colonization. However, it may not continue forever. WHAT IF TESLA RUNS OUT OF CASH???
Maybe, a crash is exactly what Tesla needs to be pushed to restructure its business model, cut expenses and become profitable.
Every time the Apple company releases the new iPhone, on the release date the AAPL stock opens up.After positive opening the AAPL stock declined.
Each time, in several days right after the iPhone release, the first wave was negative - the APPL stock declined.
realreaction on the iPhone sale numbers usually comes after quarterly earning release - when some or final iPhone sales numbers are out.
According to the history of the iPhone release events, we should not expect any strong moves on iPhone 7 release date.
Most likely, we will have positive opening, when AAPL's loyalist (encouraged by release event) will push the AAPL stock up. Then more conservative traders may push the price down.
After the release date we will have different rumors in the media about sales. As always we will hear some disappointments that new iPhone is not as good as expected, something as always will not work and iPhone would require some patches and updates and we may see the AAPL stock sliding down. This is normal media reaction - they always are trying to find something that does not work. Apple is too famous and too big to avoid attention of enthusiasts to dig for bugs. That is why the first reaction is negative in most cases right after the new iPhone release. This is the reaction of a crowd who follow the rumors.
The real game will came when in October-November 2016, when 3rd quarter earning report is released and when Apple will report some iPhone 7 sales number. This is when institutional investors who trade in "big money", after they have solid ground to make investment decision, will decide either push the AAPL up or to crash it down
Hourly and daily historical AAPL stock charts from http://www.marketvolume.com/charts/
September 25, 2015 - iPhone 6s, 6s plus release
September 19, 2014 - iPhone 6, 6 plus release
September 20, 2013 - iPhone 5c, 5s release
September 21, 2012 - iPhone 5 Release
October 14, 2011 - iPhone 4s Release
June 24, 2010 - iPhone 4 Release
Current Breadth Sentiment
When we compare to the previous week the Breadth sentiment improved on the S&P 500, DJI and NYSE Composite indexes, and it remained unchanged on the Nasdaq 100 and Russell 2000 indexes:
78% of the S&P 500 listed stocks are bullish (moved up over the past week),
93% of the DJI listed stocks are also bullish (moved up over the past week),
75% of the Nasdaq 100 stocks are bullish (stayed unchanged),
65% of the Russell 2000 stocks are bullish (moved up slightly over the past week),
76% of the NYSE Composite index stocks are also bullish (moved up over the past week).
Source: http://www.marketvolume.com/quotes/highlowrangechart.asp
based on the Breadth Data the market sentiment remains strongly bullish. On the chart #1 below you may see the S&P 500 Breadth chart. The other indexes (DJI, Russell 2000, NYSE composite and Nasdaq 100) Breadth charts looks similar
Chart #1: S&P 500 index High-low Breadth chart - green line represents bullish stocks and red line represents bearish stocks
charts courtesy of http://www.marketvolume.com/charts/
Good thing does not last forever. Will apple be able to make another 1,000% over the next 5-8 years. Comparing to rising starts like Amazon (NASDAQ:AMZN) the AAPL stock does not looks like a growing company. The same as nine years ago the Apple company is mainly cell-phone producer. If at the beginning it was the only company, now it is just another company. When everybody around buying another companies and expending their business, the Apple company remains just another cell phone company which sit on a pile of cash and does nothing. Will be able Apple company make another great up-move without expanding in the era of Globalization?
The Apple company has spend a lot of cash to buy back its own stocks. It encouraged investors, it kept the stock from falling. However, it reduced the number of the outstanding shares. Because of that, Russell 1000 already downgraded AAPL weighting in June of 2016.
http://www.reuters.com/article/us-usa-stocks-russell-apple-idUSKCN0Z618F?type=companyNews
Average APPL daily volume dropped to the level last seen in 1993. Can Apple buy back any more stocks without affecting its weighting in other indexes? And if it can will it be as effective as before?
There are many other points rising question mark when it comes to "to Buy or not to Buy" the Apple stock. For many investors now this question should be rephrased as "to keep or not keep" the APPL stock. Will Apple continue being "the icon" for consumers and investors or it will turn in a "legend" from the past?
charts courtesy of http://www.marketvolume.com/charts/
The past two weeks pushed the DJI and S&P 500 strongly up by breaking all historical highs. On many time-frames, because of the past 2-week strong up move, many technical indicators are strongly bullish.
Below you may see 10-year DJI volume chart (1 bar = 10 days).
source: http://www.marketvolume.com/charts/
To understand better whether DJI may move higher, we take a look at the stocks listed in the DOW index. Below you may see 30 charts of the DOW listed stocks divided in three groups.
9 long-term bullish stocks
Verizon (VZ)
The Travelers Company (TRW)
Coca-Cola (KO)
Johnson & Johnson (JNJ)
Home Depot (HD)
General Electric (GE)
3M (MMM)
Visa (V)
United Health Group (UNH)
11 Recovering stocks
United Technologies (UTX)
Pfizer (PFE)
Procter & Gamble (PG)
Chevron (CVX)
Intel (INTC)
IBM (IBM)
Exxon Mobil (XOM)
Sisco Systems (CSCO)
Caterpillar (CAT)
Wal-Mart (WMT)
Merck (MRK)
10 weak stocks
Microsoft (MSFT)
Goldman Sachs (GS)
JP Morgan Chase (JPM)
EI DU PONT DE NEMOURS (DD)
Nike (NKE)
Apple (AAPL)
McDonald's (MCD)
Disney (DIS)
American Express (AXP)
The Boeing (BA)
charts courtesy of http://www.marketvolume.com
In summary, we have 9 strongly bullish Stocks, 11 recovering stocks and 10 weak stocks. As of now, most of these stocks either in short- or mid-term up-move and they are pushing the DJI index up. If 11 recovering stocks will continue their recovery further, then 2/3 of DOW stocks as a pushing force to continue pushing DOW to new highs. If not , we could be looking for another months of the side-way range trading.
Will it brack $84 as it drops for the 5th time to this level?
chart courtesy of http://www.marketvolume.com
Chart courtesy of http://www.marketvolume.com
1. Friday-Monday selling on high volume - means Big Number of Bulls are buying from the Bears, yet Bears are stronger and they push the price down
2. today we had 205 smaller volume - Bears decided to yield to the Bulls who run the price up.
3. At the end of today's trading session, we had small increase in volume - the Bears attracted by higher prices are slowly coming back, but they re not able o beat the Bulls.
If we see further increase in volume - would be a sign of more Bears trying to sell to the Bulls at higher prices - if the Bears beat the Bulls we will see another reversal down which will push the price below yesterday's low.
Apple (AAPL) - has 3.4 component's weighting in the S&P 500, Microsoft (MSFT) - has 2.4. The top stocks with highest impact on the S&P 500 trend would be:
Apple Inc. (AAPL) - 3.454514
Microsoft Corporation (MSFT) - 2.476262
Exxon Mobil Corporation (XOM) - 1.806482
General Electric Company (GE) - 1.599475
Johnson & Johnson (JNJ) - 1.595228
Wells Fargo & Company (WFC) - 1.440735
Amazon.com Inc. (AMZN) - 1.429393
Berkshire Hathaway Inc. Class B (BRK.B) - 1.395743
JPMorgan Chase & Co. (JPM) - 1.363343
Facebook Inc. (FB) - 1.333700
Alphabet Inc. (GOOG) - 1.240467
However, when you take a look at the performance of these companies, they yield greatly to the much smaller companies. See below top 10 S&P 500 performance over the past 6 months:
CONSOLIDATED ENERGY (CNX) - 99.48 %
NRG ENERGY (NRG) - 98.33 %
SOUTHWESTERN ENERGY (SWN) - 96.12 %
ONEOK (OKE) - 85.20 %
JOY GLOBAL (JOY) - 74.69 %
NEWMONT MINING (NEM) - 70.58 %
COMPUTER SCIENCES (CSC) - 69.30 %
RANGE RESOURCES (RRC) - 66.71 %
WYNN RESORTS (WYNN) - 56.80 %
CABOT OIL & GAS (COG) - 48.34 %
The best performed S&P 500 stocks in 2016 with the strongest YTD performance would be
SOUTHWESTERN ENERGY (SWN) - 113.36 %
CONSOLIDATED ENERGY (CNX) - 94.30 %
NEWMONT MINING (NEM) - 93.94 %
RANGE RESOURCES (RRC) - 87.73 %
ONEOK (OKE) - 86.24 %
JOY GLOBAL (JOY) - 77.38 %
FREEPORT-MCMORAN (FCX) - 65.98 %
COMPUTER SCIENCES (CSC) - 58.69 %
NRG ENERGY (NRG) - 51.70 %
WYNN RESORTS (WYNN) - 46.15 %
The best companies over the past month on the S&P 500 would be
COMPUTER SCIENCES (CSC) - 54.26 %
WESTERN DIGITAL (WDC) - 33.51 %
NVIDIA (NVDA) - 31.25 %
MICRON TECH (MU) - 30.63 %
SEAGATE TECH (STX) - 29.31 %
SOUTHWESTERN ENERGY (SWN) - 28.50 %
ALLERGAN (AGN) - 23.90 %
DEVON ENERGY (DVN) - 23.79 %
APPLIED MATERIALS (AMAT) - 21.64 %
MARATHON OIL (MRO) - 1.45 %
And past week best performers on the S&P 500 were
JOY GLOBAL (JOY) - 34.89 %
MICHAEL KORS HOLDINGS (KORS) - 21.46 %
TRANSOCEAN (RIG) - 16.46 %
SOUTHWESTERN ENERGY (SWN) - 15.85 %
CF INDUSTRIES HOLDINGS (CF) - 15.05 %
ENDO PHARMACEUTICALS HOLDINGS (ENDP) - 14.95 %
CHESAPEAKE ENERGY (CHK) - 14.42 %
SEAGATE TECH (STX) - 13.99 %
MOSAIC (MOS) - 13.43 %
ENSCO (ESV) - 12.96 %
Source:
http://www.marketvolume.com/stocks/winnerslosers.asp
The one may ask what it (the lists above) - may give us? Despite heavy bragging in the media, we do not see the market giants like AMZN, AAPL, GOOG, MSFT in the list of the best performed stocks. Instead we have second level of the S&P 500 companies moving up strongly. Maybe the "market giants" exhausted their potential for a while and there are not a lot of room them to run up. Maybe it is a time to look into other S&P 500 companies with higher growth potential.
Buffett news pushed the AAPL up. According to the news he bought 9,811,747 at the end of the first quorter and he alocated $1,069 billion.
$1,069 billion divided by 9,811,747 shares will be $108.95
If Buffet was buying at the end of the 1st quarter it could be only on March 30-31 when the AAPL was traded around $108.95
chart courtesy of http://www.marketvolume.com
The average volume on the Apple dropped to 35 million shares per day in 2016 from 282 million shares per day in 2008. Such low average daily volume on the AAPL stock was last seen in 1992!!!
source: ]http://www.marketvolume.com/stocks/averagevolume.asp?s=AAPL&t=apple
The same could be said about other highly popular stocks. Below you may see the S&P 500 volume decline from early 2009 to the end of 2015 when we see some increase in volume.
Contrary, the Russell 2000 volume remained unchanged all the time - see the chart below. Only biggest market companies (listed in S&P 500, DJI and Nasdaq 100) suffered drop in volume.
Explanation to the charts below:
Pane #1: index candles
Pane #2: Advance decline volume. Green line represent summary volume of the advancing listed in the index stocks and red line represent summary volume of the declining listed in the index stocks
Pane #3: Advance decline volume oscillator - represent the difference between advancing and declining volume. It is basically the same as the indicator in the pane #2, just visually easier to see whether bullish (advancing volume) or bearish (declining volume) pressure is dominant
Pane #4: Summary volume of the stocks listed in the index with 4-day MA applied to it
Pane #5 High and lows - green line represent the number of listed in the index stocks which are hitting their 52-week highs and red line represent the number of the listed in the index stocks crashing their 52-week lows
Brief Breadth analysis of the charts below:
On the NYSE Composite (^NYA), S&P 500 (^SPX) and Russell 2000 (^RUT) the Bullish pressure (volume of the advancing stocks) remained dominant despite the small correction we had over the past two weeks. On the DJI (^DJI) and Nasdaq 100 (^NDX), volume associated with bearish stocks is stronger. Because of the bullish pressure dominance on the major indexes we may assume that there are good odds we may see the indexes moving back to heir April's highs. The technology sector may remain weak and may keep the indexes from the further advance.
The positive sign is that we do not see a big number of stocks making new 52-week lows. We have not seen a lot of then even on the Nasdaq 100 during the recent 6% decline from April's high. There is nothing close to what we had right before decline in August 2015 and right before strong slide in January-February 2016. This also confirm that current small correction on the Nasdaq 100 most likely will not push the market in a deep slide and most likely it will be just a small correction.
charts courtesy of http://www.marketvolume.com
if NFLX passes the $80 support (I do not see any problem for it) then the next possible stuck would be around $63-67 and after that around $49-53. Those are the levels were the biggest volume was accumulated. Big number of the Bulls opened their long positions at these levels and as the NFLX will be on the edge to turn a lot of bullish investments from positive into negative this will a sensitive moment for many investors. In addition these levels match past support/resistance levels.
chart courtesy of http://www.marketvolume.com
Strong volume surges in February of 2016 marked the bottom. In February, when TSLA dropped to low level and a lot of Bullish traders attracted by relatively low TSLA price started to jump into the market and buy TSLA stocks in big volumes - the source of volume surge. They wave of the Bulls was so strong (big volume) they beat the Bears and they pushed the TSLA up.
Chart courtesy of http://www.marketvolume.com
Another Strong volume surge marked the top of the recovery in April of 2016 at the top of the recovery. In April, when TSLA hit highs, and now another wave of TSLA traders jumped into the market. In this case it was the bears and it was bigger volume surge when compared to the one we had in February. Much more Bears were dumping this stock in April and their pressure overcome the February's Bulls who was already exhausted
Now we have another strong volume as TSLA stock crash - there are still Bulls who believe in TSLA. Should we have another couple of negative trading session with even higher volume it would suggest another big wave of the Bulls and we may see another bounce up.
We will continue see TSLA bouncing up and down until either Bulls or the Bears become exhausted. Taking into account that the volume surge in April 2016 was much stronger, we may say that the Bears' pressure to dump this stock is stronger. Stronger volume surge also mean bigger institutional traders are dumping this stock. Based on this I would expect a strong TSLA crash. When? When the Bulls currently jumping on each dive become complete exhausted. As Richard*Wyckoff*said before a dive down the market had to shake off all the bulls... When I see that this stocks declines and ignores strong volume surges to the price down-side, that would mean crash.
AAPL is a great company and since may 2013 it made 140%. On the other hand, it only about 2%up from the top in September 2012. Decline in average daily volume from 140M shares in 2010 o 40M shares in 2016 suggests that many investors lost interest in this stocks - most likely many already fully loaded by it. 2% up from September 2012 (3 and half years ago and yes I took the worst point) confirms that. Third time the AAPL is heading to the support levels set in August 2015 and February 2016 and it does not look like todays decline attracted a lot of Bulls to start buying. If the August 2015 and February 2016 support levels are broken, the AAPL may slide down to the $78-84 range where the highest volume was accumulated (see the chart below) - that's where the biggest amount of money were injected in the AAPL.
chart courtesy of [URL='http://marketvolume.com/']http://marketvolume.com[/URL]
if NFLX passes the $80 support (I do not see any problem for it) then the next possible stuck would be around $63-67 and after that around $49-53. Those are the levels were the biggest volume was accumulated. Big number of the Bulls opened their long positions at these levels and as the NFLX will be on the edge to turn a lot of bullish investments from positive into negative this will a sensitive moment for many investors. In addition these levels match past support/resistance levels.
chart courtesy of http://www.marketvolume.com
Below you may see AAPL average daily volume for the past 7 years (after the 2008 stock market crash):
Year - Average Daily Volume
2015 - 50,428.14 K
2014 - 61,443.49 K
2013 - 101,608.68 K
2012 - 131,964.19 K
2011 - 123,074.72 K
2010 - 149,826.30 K
2009 - 142,116.74 K
Starting from 2009 there is steady decline in daily volume on the this stock. Right now, the average daily volume is two times lover than it was in 2011 and 3 times lower than in 2009. See the 7-year chart for this stock with green and red volume bars at the bottom of a chart:
High volume mean big number of investors are involved in trading. Small volume means luck of interest of investor in a stock and huge volume means a lot of institutional traders are involved in a game. From the chart and data above we may see that a lot of institutional and retail traders were attracted by the Apple stock in the past. Starting from 2013 a lot of institutional investors simply stopped buying this stock. That is why we had a strong correction in 2013 and that is why by the end of 2013 the daily volume dropped to 61 M per day from 130 M per day at the beginning of 2013. The drop in volume was caused by the institutional traders because the retail traders do not trade in such volumes.
When institutional traders loose the interest in a stock, it becomes difficult for retail traders to continue pushing it up and that what we witnessed in 2015.
Now the AAPL stock is 25% from its top in 2015. This is a strong drop and a lot of retail traders are attracted by this drop and a lot of them are jumping in. I am referring to the retail traders because they trade in low volume. The Apple Inc. is a great company. However, despite 25% drop from the top, the Institutional traders have not became attracted by the this stock. [B]WE DO NOT SEE STRONG INCREASE IN VOLUME!!![/B] Institutions are not jumping into the APPL stock and they are not starting to buy. They did not get scared either - they did not start selling as well - average volume remains at the same low levels
Without of institutional investors that AAPL cannot move up a lot - we may see bounces up caused by retail traders but nothing serious. Only when the big institutions start buying the AAPL could be pushed up. Without them this stock is doomed for further decline. That is why I am out of this stock and I am not coming back to it for a while.
I will be back only when I see institutional traders are coming back - when I see average daily volume on the AAPL stock rising above 100 M per day, it will be a sign for me that AAPL drooped to the level when it started to attract the institutional money. I do not know when it happen but until then AAPL is not worth bothering....
When I see the institutional money are coming in this stock I will jump in as well.
The S&P 500 intraday charts over the past 14 years in the Christmas season. 9 of 14 times the index was positive and 9 of 14 times te index had a small reversal after Christmas
chart courtesy of marketvolume.com
If you take a look at the AAPL (see chart #1 below), you will see that as of now the APPL is about at the same level ($105.90) it was on August 20 of 2015 ($106.05) a day before it crashed to $92 which is 31.6% from the highest high ($134.53) seen on April 28 of 2015.
[B]Chart #1:[/B] AAPL stock chart as of 12/18/2015. 1 bar = 1 day.
Now, if you compare August 21 (see chart #2) and December 18 (chart #3) intraday trading sessions, you will see that they are quite similar. On both of the charts the AAPL declined and on both charts we see increase in volume which could be considered as some panic.
[B]Chart #2:[/B] AAPL stock chart as of 05/20/2015. 1 bar = 2 minutes.
Chart #3: AAPL stock chart as of 12/18/2015. 1 bar = 2 minutes.
Charts courtesy of www.marketvolume.com
From one side the trends on the AAPL on 8/21/2015 and on 12/18/2015 are similar (see charts #2 and #3 above), from another side, by looking at the chart #1, you will see that volume on 8/21/2015 was much higher than on 12/19/2015 (126 M shares versus 86 M shares). On 8/20/2015 we had more traders who was selling in panic. However, we always have to remember that volume is 2-side transaction and for each seller we have a buyer. High volume surge surge on 8/21/2015 also mean bullish traders attracted by low AAPL price started to buy. On the next trading session (8/24/2015) the AAPL slid strongly and we had even stronger volume surge which suggest that bigger number of bullish traders started to buy AAPL ($90-100 for AAPL stock looked very attractive) from the Bearish traders. These bullish traders were stronger then the bearish traders and they pushed the Apple up.
On this Friday (12/18/2015) we had the AAPL at the same level it was on 8/21/2015, yet on much lower volume.
Price declines because there is more bearish traders willing to sell at lower price. Smaller volume means smaller number of bullish traders are jumping to buy from the Bears. The AAPL does not look any more as attractive as it was in August of 2015. If on Monday the AAPL continues to decline, we may not see a bounce as we saw on August 24 of 2015 simply because now there is smaller number of the Bulls than it was in August.
Are we going below the support set at the end of August 2015 - see analysis at
http://www.marketvolume.com/analysis/marketanalysis2015.asp
Breadth charts for the NYSE and S&P 500.
As pf now, we have more bearish stocks which are traded closer to their 52-week lows than bullish stocks (traded closer to their 52-week highs) and the number of stocks dropping to their 52-week lows is on the rise. See the NYSE High-Low Range Chart below:
On the S&P 500 the number of bearish stocks overcame the number of bullish stock on Monday (Dec 7, 2015) - see the chart below:
Chart source: http://www.marketvolume.com/quotes/highlowrangechart.asp
No matter what other say about the great economy and great market, I will not believe in Bullish market while I see such big number of bearish stocks on the market.
Yes, we have big companies like AAPL, MSFT, HD, GOOG, NKE, NFLX, AMZN which still hold the main indexes (DJI, S&P 500, Nasdaq 100) close to the top. Yet, I do not want to be in the market when these stocks will dive into a correction. The weighting of these stocks in the main indexes is relatively high and by taking into account that smaller companies are already in deep correction, this pay push indexes fast and strongly down.
S&P 500 and Margin Dent
According to the NYSE report, staring from June 2015 margin debt dropped by $50,000 M. It means that $50,000 M of margin money was pulled out of stock market. Traders were closing their position and as a result we had a correction in August-September 2015 - see the margin Debt chart below
Last time we had similar drop in the "Margin Debt" in period from April until September of 2011. As a result of pulling money out of the market we had strong correction in June-July of 2011.
Unfortunately we still do not have October's "Margin Debt" data neither at
http://www.marketvolume.com/quotes/economic_report.asp?release=margin_debt
nor at the original source at
http://www.nyxdata.com/nysedata/asp/factbook/viewer_edition.asp?mode=tables&key=50&category=8
I do not know when the October's data will be posted, yet, if the October's "Margin Debt" is down, it could be a serious sign of coming recession. On the other hand, should it go up or flat as S&P 500 did then it could be some positive sign.
I guess, we should wait to see whether the traders continue pulling money out of the market. At least, if recession should come it will not come in one day.
By checking the Volume-by-Price (also known as Volume Profile) chart of the S&P 500 index (see the index chart below), we may diffidently say that over the past year the main trading activity on the S&P 500 index occurred in the $2078-2116 price range. This should not be a surprise as most of the time (from February until September) the index was moving side-way in this range. We also may say that in that price range the Bearish volume (volume during price decline) was bigger than the Bullish volume (volume during price advance) and bearish pressure was stronger.
Now the S&P 500 index is back in this price range and we may expect to see another volatile action. Since the lot of trading activity occurred in this price range is very sensitive level for many investors. Those who bought long in this price range and still in the position will have their losses reduced to minimum. These who went bearish in this price range and still did not close their position will have their profit dropped to minimum. For both parties it is psychologically sensitive area and many investors will be thinking about closing either their bullish or bearish position. Also, there are many technical tools (various support/resistance lines) which are quite popular and used by many technical analysts. Respectfully, we will have additional investors jumping into the market while S&P 500 is in this price range. All of this suggest that, most likely we will see the S&P 500 having side-way action here again. We already had one bounce from the top (November 3-4 of 2015) and one bounce from the bottom (November 12-16 of 2015), and we may see more of such bounces.
chart courtesy of http://www.marketvolume.com
Over the past couple of days we has strong increase in trading volume on the DJI index. See the DJI index chart (chart #1) below. On the DJI index such strong increase in trading volume could be compared to the bottom of the correction we saw in August 2015. At that time, the strong bearish volume surge marked the bottom of the correction. Now we have equally strong bullish volume which could be a sign of a coming reversal down in the near future.
Chart #1: DJI Volume chart
The interesting sign is that we do not see such strong increase in volume on other market indexes. By checking the most traded stocks on the DJI index you will see that the highest volume has been around GE stock - see the chart #2 below. As a rule we usually may see strong increase in volume during a strong price change, when stock or index suddenly drops or strongly moves up and a lot of stop-loss orders are triggered. However, in the current case with the GE stock, we have strong increase in volume during the side-way range trading. Because of that, it is difficult to say whether there are the Bulls or the Bears are the main force behind this volume
Chart #2: GE stock chart
charts from www.marketvolume.com
By going into the higher time-frames and by checking the 10-year the GE stock chart, we actually may say that the current increase in volume on the GE stock could be compared to the GE volume seen during the crash in 2008. It pushes me believe that this is volume is not caused by short-term day traders, not even by mid-term players. Most likely this volume is caused by the long-term traders, possibly institutional long-term investors. If this volume is caused by the institutional long-term traders who was buying back in 2009 then I would say id could be serious sign that they started to dump the GE stock and there is the possibility soon we will have this stock crushed down.
See the High-Low range NYSE and S&P 500 charts.
The red line on the charts below is the # of Bearish stocks which are traded closer to their 52 week lows and green line on the chart below is the # of bullish stocks which are traded closer to their 52-week highs.
Chart #1: High-Low Range NYSE index chart from February until November 2015:
Chart #2: High-Low Range S&P 500 index chart for the period from February until November of 2015.
charts from http://www.marketvolume.com/quotes/highlowrangechart.asp
The number of the bearish stocks comprising the NYSE index was bigger than the number of bullish stocks in May of 2015 (see the chart #1).
By comparing the NYSE and the S&P 500 index charts, we may say that the bigger part of the NYSE stocks became bearish in May of 2015. The majority of the S&P 500 stocks was still Bullish at that time. This mean the smaller (weaker) companies went into the decline in May 2015 while bigger (stronger) companies (like GOOG, AAPL, MSFT and etc) were still Bullish. The stock market cannot stay bullish all the time just because several of big stocks are bullish when the rest of the stocks are bearish. In August 2015, the market giants started to decline (see the S&P 500 chart #2 above) which lead to a sudden crash.
Today, the number of bearish stocks advanced above the number of bullish stocks on the S&P 500 index again (see chart #2 above). While we see the majority of stocks declining on the NYSE and S&P 500 indexes (small and big companies) we cannot talk about the Bull market. At this point of time, the odds are higher for a correction than for the Bulls.
Staring from May 28 of 2015 more stocks listed in the NYSE Composite index are traded closer to their 52 week lows. For almost two months when we have more bearish stocks on the market. Right now, 1784 stocks from the NYSE index traded closer to their 52 weeks lows, 621 of which are traded in the 5% range from their 52 week lows:
http://www.marketvolume.com/quotes/breadthindexhighlowrangechart.asp?s=NYA&r=50
Yes, the major market indexes, the S&P 500, DJI and Nasdaq 100 are at their historical highs. On the other hand, when you look at the DJT and DJU you will see that these indexes are already in the deep correction.
The S&P 500, DJI and Nasdaq 100 are comprised of the strongest companies on the market. So far, the majority of the S&P 500 stocks are still closer to their 52-week highs, 266 versus 234 and this is positive sign:
http://www.marketvolume.com/quotes/breadthindexhighlowrangechart.asp?s=SPX&r=50
However, 81 of the S&P 500 listed stocks are traded in the 5% range from their 52 weeks lows:
http://www.marketvolume.com/quotes/breadthindexhighlowrangechart.asp?s=SPX&r=5
It is not started yesterday and it is not started a week ago. We have the major market indexes in the range side-way trading since February 2015 and many of the stocks are in decline for a couple of months. When the majority of the stocks are in the heavy correction, how long do you think the strongest companies like AAPL, AMZN and other can hold the major indexes at the top.
I am not suggesting the market will crash, but I would say there are a lot of points to consider:
1. Dollar getting stronger and it does not looks it will change its trend
2. Tax rate most likely coming
3. Oil getting cheaper
4. Greece still can generate quite negative surprises
5. China market is in recession
6. Most stocks on the NYSE in a deep correction
7. When news are released, market react on negative news and ignore positive ones. Example, AAPL good earnings and bad expectations..
8. Some market indexes are already in the deep correction (DJU, DJT and etc)
The S&P 500 is down 5% from its high, NYSE Composite is 5.5% down, DJI is 4.5%. Not a lot from one side. From other side, Dow Jones Transport is 14% down and Dow Jones Utilities is 12.% down. I am pretty sure the market may go deeper than 10%.
It does not matter whether it is Greece or China, they are just triggers. The market need to have 2 things to go into a deep correction: condition and trigger. Conditions: market should be overbought, long run up without any decent correction, stocks should be overpriced with high PE even on stocks you would never thought would have it, low oil prices hurting the gas and oil industry, rising dollar hurting the export and corporation that export overseas, [B]7 years of easy money for Wall Street (who just pumped stocks) pushed the stocks to the levels they are not supposed to be[/B], and etc. Then we need a trigger. Everybody, expected FED rate increase would be such a trigger. Maybe FED knows that it and that is why for second year in a row FED delaying rate hike. But now we have Greece who can be a trigger and I am not going to be surprise if we will have much deeper than 10% decline.
Right now we have more than 1700 stocks listed in the NYSE composite index traded closer to their 52-week lows.
Breadth Chart - NYA - High-Low Range Chart
Last time such high number of the bearish stocks was seen on October 13, 2014 - at the bottom of the correction. I do not think we are at the bottom yet. In October of 2014 at that time we had strong increase in volume which indicated that bulls were buying in huge amount from bearish traders. This is not the case now. We do not see an increase in volume which means the Bulls are not attracted by the current price level and they do not feel confident to jump into the game. Only when I see increase in volume, only then I will say that we could be coming close to the bottom because the bulls are starting to buy. Until then, the market may drop another 5%, or 20% or even crash - I do not know. I only know that market declines and until I see huge volume to price downside which would tell me that "Big Guys" are starting to buy (only they may reverse supply/demand balance in the favor of the Bulls) I will be out of all my long positions.
The S&P 500 has been in the sideway range between $2040 and $2134 since February 4 of 2015. This is 4.4% range if you count it from the bottom line of this side-way corridor and this is 5-month trend. Last time we had such long side-way trading in January - August of 2011 when S&P 500 index was moving in the range between $1250 and $1370. At that time it was 8 months of the side way action. The same as now, it was about 100-120 points range. The only difference, in 2011 it was 9.6% range and now it is only 4.4% range.
In August of 2011 the S&P 500 index exited this side-way corridor by crashing down to $1090 which is 20% from the high at $1370. I an not telling that we will have 20% correction down, however, taking into account that we had strong steady uptrend without any decent corrections on the S&P 500 for several years (since 2011), we should not disregard such possibility.
So far, it is difficult to expect a deep correction when volatility remains at low levels. The low volatility is the sign tat majority investors are still confident - they are not in panic yet.
Right now, still the majority of the S&P 500 stocks (279 stocks) are traded closer to their 52-week highs. See at
SPX - High-Low Range Chart
On the other hand, since May 29, 2015 majority of the stocks from the NYSE Composite index are traded closer to their 52-week lows - they are clearly bearish. Today it is 1108 bullish (stocks traded closer to their 52-week highs) versus 1688 bearish (stocks closer to their 52-week lows). See at
NYA - High-Low Range Chart
Last time such high number of bearish stocks on the NYSE was seen in October of 2014 when the NYSE composite index had 11% correctional move down.
We may say that the strongest US stocks which are listed in the S&P 500, DJI and Nasdaq 100 indexes still hold the market, yet, the rest of the market is quite uncertain. The Dow Jones Utilities index already declined almost 15%. The Dow Jones Transport is also 13% down and it does not look like any of this indexes are going to reverse up. This was not the case in 2011. At that time we had a side-way range trading across all indexes. Now, we have oil, gas, materials, utilities and transportation market sectors in a decline. Somebody may argue with it, but look at those indexes charts - the indexes covering these sectors are in decline and they are in decline not for just a couple of months.
I an not stating that the market will crash tomorrow. We are entering the summer season and we still could have "lazy" side-way trading. Yet, I think that should we have negative Greece output, it could trigger a strong correction. The decline on June 29th show that the market has a room to slide down and it does need high trading volume to do it - strong decline on that date did not generate strong volume surge - it tells us that there are not a lot of bullish trades ready to jump in and to stop a decline.
S&P 500 index volume and advance/decline chart. Check the divergence in the S&P 500 and DJU trends
chart courtesy of http://www.marketvolume.com
S&P 500 index volume and advance/decline chart. Check the divergence in the S&P 500 and DJU trends
chart courtesy of http://www.marketvolume.com
For a couple of minutes this article was on the Yahoo finance
http://finance.yahoo.com/news/dow-brick-wall-waiting-collapse-120000187.html
where Louise Yamada pointed on the divergence between DJI and DJT by putting emphasis that it usually happens before a strong correction down and the possibility of 10-20% correction this summer.
On the chart below you may see the divergence between DJI (black bars) and DJT (orange line) started at the end of March 2015
Chart courtesy of http://www.marketvolume.com]marketvolume.com
To better understand the number below I have to explain that bearish stock below is a stock which is traded closer to its 52-week low. A stock which is traded closer to its 52-week high is considered bullish.
Over the last 4 trading sessions the number of stocks traded closer to their 52-week lows has been bigger than the number of the stocks traded closer to their 52-week highs on the NYSE Composite index (see the chart below). The difference is not big, yet the fact that we have more bearish stocks over the past 4 consecutive trading days is interesting, especially it becomes more interesting when we take into account that NYSE composite index is traded only 1% from the highest close recorded on 5/21/2015.
Let's check some of the most recent NYSE Composite index (^NYA) statistics when the number of bearish stocks (stocks traded closer to their 52-week lows) was bigger than the number of bullish stocks (stocks traded closer to their 52-week highs):
The last time we had 3 trading sessions in a row of bearish dominance on May 11-13, 2015 when the ^NYA was traded 0.91% from the highest close recorded on April 24, 2015.
Then
2 trading sessions in a row on May 6-7, 2015 when the ^NYA was traded 1.40% from the highest close recorded on April 24, 2015.
1 trading session on March 11, 2015 when ^NYA index was 3.43% down from the highest close recorded on March 2, 2015.
1 trading session on January 15, 2015 when ^NYA index was 4.69% down from the highest close recorded on December 29, 2014.
3 trading session in a row on December 12-16, 2014 when ^NYA index was 4.93% down from the highest close recorded on December 5, 2014.
Then we had strong correction on October 1-22, 2014, 16 trading sessions in a row when number of bearish stocks was bigger.
The next time when we had the number of bearish stocks bigger, goes back to February 4-5, 2014.
What we may see from these numbers:
Over the past month we have increased number of consecutive trading sessions when the number of bearish stocks overcomes the number of bullish stocks and it happens closer to the highest recorded trading close price. It could be a sign of a coming strong correction. Yet, we have to understand that this statistic does not tell us we will have a correction but it rather says that the current market is in very sensitive condition when a small trigger (negative news or anything else) may start a correctional move down. It may happen tomorrow, it may happen in a month, it may not happen at all. Yet, probability of having it, I would say is high.
NYSE Composite Index 50% High-Low Range Chart:
chart source: [url=http://www.marketvolume.com/quotes/breadthindexhighlowrangechart.asp?s=nya&r=50]Breadth Chart - NYA - High-Low Range Chart[/url]
The DJI index is only 1.22% up for 2015. See below at the DJI index components' charts.
I have divided the 30 DOW stocks into four group: 1) stocks with bullish sentiment, stocks which are in side-way range trading with slightly bullish bios, 2) stocks where bearish sentiment defined clearly and 4)stocks in side-way trend with some bearish signs.
Bullish Stocks
Slightly Bullish Stocks
bearish stocks
Slightly bearish stocks
As you may see the situation is quite unstable. And this is at the top. The DJI is not as bullish as we would like to see. Smallest shift in the bullish stocks toward the bears may actually push the DJI index into a strong correction
Russell 2000 high low range chart for May of 2015
Chart legend:
1. Date
2. Index close price.
3. Index Price change
4. Number of stocks from an index basket traded in a price range. For particular example used in the legend, 42 stocks are traded in the 5% range from their 52-week highs or you may say 42 stocks are traded in the range from 95% to 100% from their 52-week lows.
5. Change in the number of stocks traded in a price range. For particular example used in the legend, on that day, there were 7 stocks more traded in the 5% range from their 52-week highs than it was on the previous trading session (42 - 35 = 7).
6. High-Low range scale. All stocks are traded either at or between their 52-week high and 52-week low. Count goes from 0 (zero) which equal to the 52-week low and 100% equal to 52-week high.
0%( zero) marks the 0% to 5% range from the stocks 52-week low.
5% marks 5-10% range from the 52- week lows, and so on up to 95% which marks 95-100% range from the 52 weeks lows
7. The difference between the number of advances (stocks traded above previous day close) and declines (stocks traded below previous day close).
Source: http://www.marketvolume.com/quotes/breadthindexhighlowrangechart.asp
It is slowing down
Source http://www.marketvolume.com/quotes/marketperformance.asp
Just run into margin and credit balance data - NYSEData.com Factbook
Chart courtesy of www.marketvolume.com
The interesting part is that starting from the beginning of 2013 we have increase in margin and steady decrease in the credit balance to maintain this margin. As of the last available data (as of March of 2015), credit balance now is 29% of the margin on all trading accounts.
According to the margin requirements - rule 431 - [I]"The margin which must be maintained in all accounts of customers, except for cash accounts subject to Regulation T unless a transaction in a cash account is subject to other provisions of this rule, shall be as follows: (1) 25% of the current market value of all securities except for securities futures contracts "long" in the account."[/I]
What happens when we have a market correction, let's say 10%, it will go as a loss for all trading accounts which are in "Long", and if the credit balance drops below 25% it may create margin calls which may push the market further down with following chain reaction of the massive margin calls and selling?